It’s somewhat hard to fathom, but it’s been over four years since PokerStars dealt a hand of real-money poker in the United States.
With its purchase of Full Tilt Poker, which led to U.S. players receiving their player account balances, followed by all of the speculation over a potential iGaming license in New Jersey and partnerships in California, it feels like they never left.
Fortunately, the poker community’s wait for the return of PokerStars is almost over. PokerStars is now on the cusp of receiving an online gaming license in New Jersey.
But it’s been four years. That’s an awfully long time for a company to be separated from its customer base, and a lot has changed in the world of U.S. online poker since.
When PokerStars last dealt a hand of real-money online poker in the U.S.:
- There were very few segregated markets in the world, and none as small as New Jersey.
- PokerStars’ local taxation obligations were minimal, thanks to the corporate-friendly tax code of the Isle of Man and the lack of regulations in different markets.
- Finally, PokerStars didn’t have to contend with the numerous alternative online gambling options that now exist, from social games to DFS.
888 and partypoker seemed blindsided by the U.S. market they returned to after a seven year absence. And while it hasn’t been quite that long for PokerStars, four years in the world of iGaming is practically a generation.
Here is the U.S. online poker market PokerStars will be returning to.
Lack of liquidity
PokerStars will first and foremost have to deal with the lack of liquidity, an unsolvable problem until New Jersey partners with other states.
PokerStars certainly understands this, but its challenge will be conveying the difference between PokerStars 2011 and PokerStars 2015 to its customers.
The price of online poker just went up
Another new variable PokerStars will have to overcome is the licensing fees and tax burdens the state of New Jersey collects. This makes it monumentally harder to turn a profit, particularly in a market lacking liquidity.
PokerStars will have to either:
- Reduce its margins to continue to offer the promotions U.S. players expect,
- or, reduce its promotions/increase rake in order to offset the higher cost of doing business.
Regulators and technology limitations
Stars will also have to deal with regulators who have been very cautious in approving games and features. It’s not a matter of PokerStars feeling a product is ready to be unveiled; that decision is now made by regulators.
Yet another issue Stars will have to tackle is banks that are still leery of processing online gambling transactions despite legalization and regulation, and Visa and MasterCard creating new credit card codes for these transactions.
Consumers with multiple options
Whether it’s social casino games, skill-based games, or Daily Fantasy Sports, the last time PokerStars dealt a hand of poker in New Jersey, it was only competing with other online poker rooms (and casinos and sports betting) for customers.
However, in the past four years there has been a seismic shift in the way people consume online gaming. There is also a lot more media for potential online poker players to consume, whether it’s social media, streaming videos, or some other entertainment option.
This dynamic has also created far more discerning consumers, and with several different gambling/gaming/entertainment options at their disposal, it’s much harder to “sell” your product to them.
The jury will ignore that last statement
Whether you agree or disagree with the accusations leveled at PokerStars (which are being invoked by PokerStars’ potential rivals in California) by the US Attorney of the Southern District of New York, as they say in court, once something has been said you can’t unhear it.
When PokerStars was operating in the United States prior to Black Friday, it didn’t have to worry about uninformed or semi-informed customers who think the company was a Ponzi scheme or who conflate PokerStars with Absolute Poker or the previous incarnation of Full Tilt Poker.
It’s still unclear how much damage was done to the PokerStars brand in the eyes of the general public during the aftermath of Black Friday.
PokerStars not calling the shots
No matter how good PokerStars is at running an online poker room, it will still have to deal with not being the primary license holder in New Jersey. That distinction goes to Resorts Casino, PokerStars’ partner in the Garden State.
Because operator licenses are restricted to brick and mortar casinos, PokerStars will only be as good as Resorts allows them to be. That being said, Resorts would be wise to let PokerStars make the decisions in this partnership.
Don’t expect miracles
Just over four years ago the Department of Justice turned the U.S. online poker market into a shell of itself on April 15, 2011. Average cash game traffic at U.S. facing online poker rooms plummeted some 75 percent from April 15 to April 16, 2011, according to PokerScout.com.
Unfortunately, many players think the return of PokerStars will facilitate a return to the online poker world that existed on April 14, 2011, when PokerStars and Full Tilt were battling for U.S. supremacy and tens of thousands of U.S. players were playing online poker.
As noted above, this is simply not going to happen. PokerStars cannot increase the population of New Jersey tenfold, or reduce its tax burden, or eliminate new iGaming verticals to create the environment that PokerStars users from 2011 were used to.